27 May 2009

Business Link: Business Link Berkshire & Wiltshire Ltd v Fearn

On 1 April 2008 Business Link West Yorkshire merged with its counterparts in North and South Yorkshire and Humberside to form Business Link Yorkshire. Similar mergers took place in the North-West and other regions of England. On its national website Business Link describes itself as "a free business advice and support service, available online and through local advisers". 

Business Link is the conduit through which considerable sums of public money are  distributed. No doubt such funding stimulates demand for goods and services creating jobs and other benefits but there are occasions when things go very wrong.   Such an occasion led to the appeal in 
Business Link Berkshire & Wiltshire Ltd v Fearn [2009] EWCA Civ 455 (20 May 2009).   

This was a claim by Business Link to recoup moneys paid under a rural regeneration scheme.   Business Link had channelled £20,000 of money that had been provided by the government to assist rural communities to recover from the foot and mouth disease outbreak to set up a new company called Regional Producers Ltd.    The transcript does not make clear what business the new company was to transact beyond stating that it was to consist of producers from all over Wiltshire.   Some of that money was to be paid to solicitors, some to media consultants and some to the defendant personally.  Business Link claimed back that money on the ground that it had been obtained by fraud.   The district judge who tried the claim found that the defendant had indeed made a fraudulent misrepresentation but awarded Business Link just £2,000 of its claim on the ground that the balance would have been paid anyway.

Not surprisingly both sides appealed: the defendant on the ground that his reputation had been besmirched and Business Link for the balance of its money.   Although Lord Justice Waller considered a retrial over such insubstantial sums to be "unattractive in the extreme" the Court of Appeal felt that it had no choice.   The district judge's finding that the balance would have been due anyway was contradicted by correspondence and there was some evidence that funding  had been approved even before the allegedly fraudulent misrepresentation had been made.

The allegedly fraudulent misrepresentation was that Regional Producers Ltd. had 25 members.   This was to meet a stipulation by an intermediary known as Great Western Enterprises Ltd. that had channelled the regeneration money from the South West England Rural Development Agency to Business Link. The reason for that stipulation is unclear and the Business Link adviser had hinted to the defendant that it could be relaxed.   The defendant had certainly provided a list of names but it was not clear whether it was a list of actual shareholders, as Business Link alleged,  or merely of persons interested in taking a shareholding as the defendant contended.

The tragedy is that a great deal more than £20,000 will already have been spent on this litigation to bring it to this point and even more is likely to be spent before it is resolved.